Bangladesh needs more warehouse space: WB

Bangladesh will need 26.74 million square feet of additional warehouse space by fiscal 2021-22 thanks to the spiralling foreign trade, according to a survey of the World Bank.

Currently, the demand for warehouse space, mainly for storing imported and exportable goods near ports, is 41.5 million square feet, according to the preliminary findings.

In the next four years, such demand will hit 68.24 million square feet, 29.54 percent of which would be used by the manufacturing sector, the study said.

The consumption-led demand will grow 27 percent and export-import demand will use 11.7 percent of the space, it said.

However, the emerging warehousing business has been facing a lot of challenges which should be mitigated as soon as possible for faster growth of business and to maintain the quality of exportable and imported goods.

The major challenges for the sector are absence of regulatory policy, scarcity of land for warehousing, absence of common bonded warehouses, ceiling on land holding, limited availability of structured warehouses, high cost of land in major clusters and lack of ventilation and fumigation facilities in warehouses.

Sugata Sarkar, director for advisory and marketing research at Knight Frank India, a property consultant, presented the findings of the survey at a workshop titled “Bangladesh logistics study: key issues, prospects and priorities” at Sonargaon hotel in Dhaka yesterday.

The WB Group commissioned a study on "Bangladesh logistics costs study: assessment of storage and warehousing" to analyse the current and future industry potential and estimate the market size of warehousing market in Bangladesh.

Dhaka Chamber of Commerce and Industry (DCCI) and International Finance Corporation (IFC) jointly organised the workshop to reveal the preliminary findings of the study.

Exporters, importers, port users, logistics service providers, government high-ups, researchers and clearing and forwarding agents attended the event.

Every year, Bangladesh sends back 7-8 lakh empty containers -- which was used to carry the imported goods -- from the Chittagong port due to lack of exportable goods.

“So, please export more so that this huge number of containers can be used properly,” said Md Abdus Samad, shipping secretary.

He said the government would update the warehousing policy soon. By 2043, Bangladesh will handle 1.22 billion cargos or 130 billion twenty-foot equivalent units, Samad said.

The construction of four jetties by the government will be completed in Chittagong in the next two years to support export and import activities, he said.

However, the government has a plan to construct 22 such jetties in Chittagong, Mongla and Payra areas, the secretary said.

Since 1986, Bangladesh has not increased the charges for port use, he said. “Our charges are lower compared to the ports in Singapore and Colombo.”

Storage and warehousing competency is the core enabler of an efficient logistics landscape, said Abul Kasem Khan, DCCI president.

“Bangladesh has been overburdened with communication infrastructure challenges which are deterring the potential of logistic growth and cross border trade expansion.”

In the latest Logistics Performance Index, Bangladesh has ranked 87th while neighbouring India occupied the 35th position, Khan said. 

The government should declare logistics and warehousing a thrust sector, he said.

“Our export is increasing. Only manufacturing sector accounts for 26 percent of the total export volume which is a good sign,” said Masrur Reaz, senior economist of the IFC.

“The demand of warehousing industries will be almost double in the next four to five years. That is why we need a modern warehousing policy framework.”

Mahbubul Anam, president of the Bangladesh Freight Forwarders Association, stressed the need for necessary policy guidelines for structured warehousing and logistics system in order to be competitive in the global value chain.

Wendy Werner, country manager of IFC for Bangladesh, Bhutan and Nepal, also urged for separate policy framework for warehousing and storage.

She said the main problem for structured warehousing in Bangladesh is scarcity of land.